All common stocks have voting rights

Voting rights for shareholders at the general meeting

When do shareholders of large companies have the right to vote for the general meeting? In our new series we deal with various aspects of the general meeting in public companies. Digitization offers great opportunities to optimize voting at such meetings.

The general meeting determines where to go

In large stock corporations, the board of directors and the supervisory board are not alone in charge. The real power lies with the shareholders - and therefore with the shareholders, who meet once a year at the general meeting. The board of directors determines business decisions, but it is appointed by the supervisory board, which in turn is elected by the shareholders at the general meeting.

In addition, the shareholders determine how the profits generated are to be dealt with. Only they can appoint special auditors by exercising their voting rights and resolve changes to the articles of association, mergers or capital increases. The general meeting is called by the board of directors, who must send the invitations at least 30 days before the day of the event.

Different stocks, different rights

The invitations are addressed to all shareholders of the company, but the right to vote at the general meeting can only be exercised by those who own ordinary shares. If, on the other hand, you hold preference shares, you cannot vote at the general meeting, but you get a larger share of the company's profits than the holders of ordinary shares. Usually, the dividend is higher for preference shares. Sometimes, however, the shareholder is also given the right to have dividends paid back if none could be paid in a year.

The voting right does not have to be exercised independently, but can be transferred to banks or individuals for a maximum of 15 months. That goes for every shareholder. If a share is entered in the share register in your own name, you own a so-called registered share. This means that you receive the invitation to the general meeting directly from the stock corporation and can thus exercise your voting rights. However, shares are often managed by custodian banks, which also exercise voting rights. A shareholder can give his bank instructions to do so, but does not have to.

Exclusion from voting rights

Certain people are excluded from voting. For example, those who are to be exonerated from the general meeting may not vote. This applies to members of the board of directors and supervisory board who themselves hold ordinary shares. They are also not allowed to have their voting rights transferred to a third party.

In addition, a shareholder may not use his voting rights to enforce the interests of persons or companies associated with the stock corporation. Contracts with supervisory boards, the management board or companies dependent on the company are therefore prohibited.

Advantages of electronic voting

In order to exercise their voting rights, shareholders will receive voting cards at the beginning of the event. However, the Stock Corporation Act stipulates that voting rights can also be exercised by post or electronically. This enables online voting and live voting at the Annual General Meeting.

Exercising voting rights digitally has many advantages. Voting at the Annual General Meeting is simplified and the susceptibility to errors when counting the voting cards is minimized. Because postage costs and organizational effort are saved, the stock corporation also benefits financially from online voting. And finally, shareholders can exercise their voting rights anywhere: voter turnout is increased.

With POLYAS you have the option of voting at your Annual General Meeting using live voting and online voting. Read more about it here!